Small business comps

Many an American dream begins with the start of a business. It is the ideal to be able to build something from the ground up, make it part of your legacy, and have your name behind something reputable and noteworthy. However the process of starting up a business is not a simple one, and unfortunately, there are many businesses that do not survive long or even past the stage of becoming an idea. One thing that could help establish your company is getting a business appraisal valuation.

Why do you need a business appraisal valuation?
Business appraisal services are significant in helping to assess just how much your company is worth, based on a number of factors. This is helpful information for those looking to sell, or to gain new partners, or validate the worth of the business for investors, potential clients or customers, or other facets of the company. The first step in the business appraisal valuation would be, quite simply, to identify the specific reason that there is a need for the valuation. The value of businesses are not standard across the board, as there are so many different types of businesses, offering differing services and products, and operating in a variety of different ways. The fact that there are 26.5 million businesses in the United States should be a pretty clear indication that there can’t be one standard for each and every one of them.

Finding the reasons for valuation and supplying the data

Once you have determined the specific need for the business valuation analysis, whether it is for buying or selling, for addressing potential, new or existing partners of the company, for estate planning, or for something else entirely, it is time to supply the firm that is offering the business appraisal services with all of the necessary paperwork and information detailing your business. Make sure that you have at least three to five years worth of income statements and balance sheets, as much of the information to determine the value of the business is obviously going to come from financial records. From there, the appraisers will be able to find the standard of value, meaning value based on hypothetical conditions such as fair market value or intrinsic value, and the premise of value, or the value based on assumptions such as the company continuing to do well or needing to sell after hitting tough times.

Playing with the big dogs
Every company needs to know its worth, particularly the smaller businesses that have more growing to do, or need to know how to compete in their market. In the United States, 99.7% of businesses have 500 employees or fewer. And while there are about 543,000 new businesses starting up every month, there are more that close their doors each month. Small business valuations can help those new companies that are trying to get off the ground better plan for success.

Everyone should have their shot at building their own version of the American dream. By figuring out just how much their new business is worth, each business owner can get that much closer to making that dream a reality.